Offer Night Protocol

Paperwork

This section is all about the documents you will be filling out and signing off on when preparing to accept an offer on your home.

The main forms that you will need to sign/initial are:

  • Form 801

  • Confirmation of Cooperation and Representation

  • Agreement of Purchase and Sale

  • Schedules

Form 801

This form was created specifically to try to deal with “phantom offers”. What’s a phantom offer, you say? A phantom offer is when a listing agent says there are six offers on a property when in fact there are less. The Toronto Real Estate Board (TREB) along with the Ontario Real Estate Association (OREA) had to figure out a way to deal with this growing concern back in 2016 when this practice was becoming more and more prevalent. Their answer to this growing issue was Form 801. Now every person that registers an offer must fill out this form. The listing brokerage must then send a copy of all the forms to OREA after every sale in case a buyer/buyer’s agent wants to confirm the true offer count for a particular sale.

Unfortunately, not much can be done for the buyer who may have paid too much for the home based on the number of offers they thought they were competing against. Ramifications could be levied on the listing agent though, where steep fines and suspension of license could come into play.

Confirmation of Cooperation and Representation

This form highlights who represents whom in the potential sale, how the cooperating agent (buyer agent) will be paid, and from whom.

 

Agreement of Purchase and Sale (APS)

This form/agreement is where it all happens. It details the price, deposit amount, closing date, what chattels and fixtures are included in the sale, etc. This agreement turns into a binding contract once two major things happen. First, all parties need to sign off on the agreement and to the terms discussed in the attached schedules. Second, the deposit is delivered to the listing broker/brokerage. Once both of these two criteria are met, the deal is deemed binding.

 

Schedules

Schedules are attached to the APS and will supersede what is written in the agreement. There are two main schedules that will accompany an APS.

  1. Schedule A – These clauses and conditions mainly involve things put in place by the listing brokerage. They talk more to things such as deposit trust accounts, interest on deposits, liability for marketing materials, the accuracy of measurements, etc.

  2. Schedule B – These are clauses and conditions that you would like to insert into the offer. Such clauses or conditions could talk to how many purchaser’s visits you would like, conditions for home inspections, or financing, or pretty much whatever else we need to add to the offer to speak on your behalf.

Definitions

  • Chattels - Items of personal property ( i.e. assets that are clearly identifiable and movable. (moveable kitchen islands, TVs, furniture)

  • Fixtures - Items that have been installed in or fixed to the property, therefore becoming part of the building. (Light fixtures, Bathroom mirrors, etc.)

  • Condition - A condition is defined as “a requirement that is fundamental to the very existence of the offer.” If the offer has conditions attached (i.e. home inspection, financing, etc.), these conditions will need to be fulfilled before the offer is firm. Depending on the condition, 1-5 days will be agreed to in order to satisfy the conditions. Once the conditions are fulfilled/waived the agreement becomes firm and you have officially bought yourself a new home!

  • Clauses - A contingency clause defines a condition or action that must be met for a real estate contract to become binding. A contingency becomes part of a binding sales contract when both parties, the buyer and the seller, agree to the terms and sign the contract.

Offer Night Scenarios

At this point, we are ready to go! We’ve addressed any concerns with the home and timed the market well to maximize ROI, conducted due diligence/home inspection prior to listing, and your home looks amazing!  

We have also created a strong listing, answered any questions that potential buyers have brought up over the last several days….basically we could not be more ready to sell!

Below are three main strategies we can use to sell your home. You will be advised on which scenario to go with based on given current market conditions/trends.

Scenario # 1: Multiple-Offer Scenario

A multiple-offer scenario is what is known to the general public as a “bidding war”. In this situation, we will be holding off on offers until a specific time and date to allow everyone who might be interested, to see the home and decide if they will bring an offer. It’s during this exposure time that buyers can conduct their own due diligence on your home. Buyers will register their offer with our brokerage, this simply means sending in a signed 801 form. It’s important to note that they are not telling us what their offer is, just that they will be presenting an offer. We will typically review offers in person or via email, depending on your schedule and comfort level. In this scenario, we will be expecting “clean offers” with no conditions. 

The following are all factors in a solid offer:

  1. Price

    A strong price based on the market value of the home and the number of offers registered on offer night.

  2. Closing Date

    Typically going with the closing date that you are seeking.

  3. Deposit

    A certified cheque or bank draft to accompany the offer in the amount of roughly 5% of the offer price

  4. Condition-Free Offers Are Ideal

    That means Buyers would need to work to conduct their own due diligence prior to offer night by having:

  • Their mortgage broker work on your pre-approvals/offer valuation.

  • Their agent run the numbers and advise on what they feel the actual value is for the property,

  • A home inspection to identify any deficiencies.

  • Aetna – call/bring in Aetna for their “blessing” that the house is termite-free (dependent on area).

Scenario #2: 24-hour irrevocable

This is what a number of agents do to bypass a multiple-offer scenario in a shifting market, where multiple offers might not be received well from the buying market. By requesting a 24-hour irrevocable we are essentially asking for 24 hours to “shop” the offer around, which could give time for others to register an offer, putting us then into scenario #1 of multiple offers. Tricks of the trade…

I can’t tell any other interested parties what the offer is, only that an offer has been registered. Good agents, who are working for their sellers, will call all interested parties to let them know an offer has been registered. As long as we are holding the offer (haven’t signed it back, yet), we are able to entertain any other offers that could come in. If another offer is accepted into the process, we will then inform the other buyer, and we will then be in a multiple-offer scenario.

If we sign back the offer to the buyer, and no other offers have come in, then the ball is in the buyer’s court to accept or counter. If they counter, they again possibly open themselves up to another offer that may come in at this later stage.

 

Scenario #3: No other competing offers, just us and the buyer

In these situations, the buyer has the most leverage and can actually negotiate a price with us. We will need to work within the irrevocable time noted in the offer. Everything is negotiable from the price to the closing date to the conditions themselves.

How offer night generally works…

We ask agents to register their offers by a certain time (usually later in the afternoon) and then we organize them to make an efficient presentation. We will then call you to decide on our next steps!